How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016 Sara R. Collins, Ph.D. Vice President, Health Care Coverage and Access The Commonwealth Fund Media Teleconference October 17, 2017

EXHIBIT 1 Who is Underinsured? The underinsured measure is based on: a continuously insured adult’s reported out-of-pocket costs over the course of a year, not including premiums, and the health plan deductible. Someone is considered underinsured if: Out-of-pocket costs, excluding premiums, over the prior 12 months are 10 percent or more of household income; or Out-of-pocket costs, excluding premiums, are 5 percent or more of household income if income is under 200 percent of poverty ($23,760 for an individual and $48,600 for a family of four); or Deductible is 5 percent or more of household income.

Summary of Major Findings Exhibit 2 Summary of Major Findings The share of adults who were insured all year but were underinsured rose sharply in 2016. Underinsured rates among people in employer plans, especially those in larger firms, ticked up significantly in 2016. People covered in the individual market, including the ACA marketplaces, had the highest underinsured rates among privately insured adults. Deductibles have become an increasingly large factor in these rising rates – more people than ever before have plans with deductibles and more have deductibles that are high relative to income. People who were underinsured report problems paying medical bills and getting timely health care at rates nearly as high as those who were uninsured.

More Than One-Quarter of Insured Adults Were Underinsured in 2016 EXHIBIT 3 More Than One-Quarter of Insured Adults Were Underinsured in 2016 Percent adults ages 19–64 insured all year who were underinsured* * Underinsured defined as insured all year but experienced one of the following: out-of-pocket costs, excluding premiums, equaled 10% or more of income; out-of-pocket costs, excluding premiums, equaled 5% or more of income if low-income (<200% of poverty); or deductibles equaled 5% or more of income. Data: Commonwealth Fund Biennial Health Insurance Surveys (2003, 2005, 2010, 2012, 2014, and 2016). Source: S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.

Underinsured Rates by Source of Coverage EXHIBIT 4 Underinsured Rates by Source of Coverage Percent adults ages 19–64 insured all year who were underinsured* 2003 2005 2010 2012 2014 2016 Total 12% 13% 22% 23% 28% Insurance source at time of survey** Employer-provided coverage 10% 17% 20% 24% Individual coverage^ 19% 37% 45% 44% Marketplace^^ – Medicaid 16% 32% 31% 26% Medicare (under age 65, disabled) 39% 42% 47% Firm size (base: full- or part-time workers with coverage through their own employer)^^^ 2-99 employees 14% 100 or more employees 11% * Underinsured defined as insured all year but experienced one of the following: out-of-pocket costs, excluding premiums, equaled 10% or more of income; out-of-pocket costs, excluding premiums, equaled 5% or more of income if low-income (<200% of poverty); or deductibles equaled 5% or more of income. ** Adults with coverage through another source are not shown here. Respondents may have had another type of coverage at some point during the year, but had coverage for the entire previous 12 months. ^ For 2014 and 2016, includes those who get their individual coverage through the marketplace and outside of the marketplace. ^^ Adults enrolled in marketplace coverage are not shown for 2014 because no one in the sample would have had marketplace coverage for the full year. ^^^ Does not include adults who are self-employed. — Data not available. Data: Commonwealth Fund Biennial Health Insurance Surveys (2003, 2005, 2010, 2012, 2014, and 2016). Source: S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.

Deductibles in Private Plans Have Grown over the Past Decade EXHIBIT 5 Deductibles in Private Plans Have Grown over the Past Decade Percent adults ages 19–64 with private coverage* * Base is those who specified deductible. Data: Commonwealth Fund Biennial Health Insurance Surveys (2003, 2005, 2010, 2012, 2014, and 2016). Source: S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.

High Deductibles Relative to Income by Coverage Source EXHIBIT 6 High Deductibles Relative to Income by Coverage Source Percent adults ages 19–64 insured all year who had deductibles that were 5% or more of income 2003 2005 2010 2012 2014 2016 Total 3% 6% 8% 11% 12% Insurance source at time of survey* Employer-provided coverage 2% 13% Individual coverage^ 7% 17% 30% 24% 23% Marketplace^^ – 22% Firm size (base: full- or part-time workers with coverage through their own employer)^^^ 2-99 employees 4% 15% 20% 100 or more employees 1% 5% * Respondents may have had another type of coverage at some point during the year, but had coverage for the entire previous 12 months. ^ For 2014 and 2016, includes those who get their individual coverage through the marketplace and outside of the marketplace. ^^ Adults enrolled in marketplace coverage are not shown for 2014 because they did not have marketplace coverage for the full year. ^^^Does not include adults who are self-employed. – Data not available. Data: Commonwealth Fund Biennial Health Insurance Surveys (2003, 2005, 2010, 2012, 2014, and 2016). Source: S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.

Fair/poor health status or any chronic condition** EXHIBIT 7 Underinsured Rates Highest Among Low-Income Adults and Those with Health Problems Percent adults ages 19–64 insured all year who were underinsured* Fair/poor health status or any chronic condition** <200% FPL 200% FPL or more No health problem Notes: FPL refers to federal poverty level. Income levels are for a family of four in 2016. * Underinsured defined as insured all year but experienced one of the following: out-of-pocket costs, excluding premiums, equaled 10% or more of income; out-of-pocket costs, excluding premiums, equaled 5% or more of income if low-income (<200% of poverty); or deductibles equaled 5% or more of income. ** Respondent has at least one of the following health conditions: hypertension or high blood pressure; heart disease; diabetes; asthma, emphysema, or lung disease; or high cholesterol. Data: Commonwealth Fund Biennial Health Insurance Surveys (2003, 2005, 2010, 2012, 2014, and 2016). Source: S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.

EXHIBIT 8 Underinsured Adults and Adults with High Deductibles Had High Rates of Medical Bill Problems Percent adults ages 19–64 Percent adults ages 19–64 with private coverage who were insured all year * Underinsured defined as insured all year but experienced one of the following: out-of-pocket costs, excluding premiums, equaled 10% or more of income; out-of-pocket costs, excluding premiums, equaled 5% or more of income if low-income (<200% of poverty); or deductibles equaled 5% or more of income. ** Respondents who reported at least one of the following medical bill problems in the past 12 months: had problems paying medical bills, contacted by a collection agency for unpaid bills, had to change way of life in order to pay medical bills, or has outstanding medical debt. Data: Commonwealth Fund Biennial Health Insurance Survey (2016). Source: S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.

Adults with Medical Bill Problems Had Lingering Financial Problems EXHIBIT 9 Adults with Medical Bill Problems Had Lingering Financial Problems Percent adults ages 19–64 who reported the following happened in the past two years because of medical bill problems^ ^ Base: Respondents who reported at least one of the following medical bill problems in the past 12 months: had problems paying medical bills, contacted by a collection agency for unpaid bills, had to change way of life in order to pay medical bills, or has outstanding medical debt. * Underinsured defined as insured all year but experienced one of the following: out-of-pocket costs, excluding premiums, equaled 10% or more of income; out-of-pocket costs, excluding premiums, equaled 5% or more of income if low-income (<200% of poverty); or deductibles equaled 5% or more of income. Data: Commonwealth Fund Biennial Health Insurance Survey (2016). Source: S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.

EXHIBIT 10 Underinsured Adults and Adults with High Deductibles Reported Not Getting Needed Care Because of Cost Percent adults ages 19–64 Percent adults ages 19–64 with private coverage who were insured all year * Underinsured defined as insured all year but experienced one of the following: out-of-pocket costs, excluding premiums, equaled 10% or more of income; out-of-pocket costs, excluding premiums, equaled 5% or more of income if low-income (<200% of poverty); or deductibles equaled 5% or more of income. ** Respondents who reported at least one of the following cost-related access problems in the past 12 months: had a medical problem but did not go to a doctor or clinic; did not fill a prescription; skipped a medical test, treatment or follow-up recommended by a doctor; or did not see a specialist when you thought you needed to see one. Data: Commonwealth Fund Biennial Health Insurance Survey (2016). Source: S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.

Exhibit 11 Looking forward: The ACA and implications of the Administration’s recent actions for underinsurance Health plans sold through associations of small businesses could offer cheap but skimpy coverage that could leave employees exposed to high costs and potentially fraud. Short term health plans also could offer cheap but skimpy coverage that could leave individuals exposed to high health care costs. Ending payments for cost-sharing reductions (CSRs) will roil insurance markets, but eligible enrollees would still have access to these plans that lower their deductibles and cost-sharing. Congress could immediately reinstate the payments through a formal appropriation. Congress could consider extending CSRs higher up the income scale or otherwise improve cost protection for middle class enrollees.

Looking forward: A red flag for employer coverage Exhibit 12 Looking forward: A red flag for employer coverage More than half of adults who are underinsured have coverage through an employer. In 2016, underinsured rates among people in employer plans ticked up significantly, especially among those in larger firms. Policy options include raising the minimum coverage standard for employer plans, setting a standard for deductible exclusions. A fundamental reimagining of private benefit design combined with health system delivery reform is needed to improve access to care and financial protection for workers, while lowering premium growth for employers.